Articles and News

On this page are links to various articles on developments and trends in the law which you may find interesting. You will also find news about the firm and events with which it has been connected.

Conditional Fee Agreements - No percentage for anyone

The conditional fee agreement is a way of funding litigation.  Commonly known as a "no win, no fee" agreement it is a form of contract between the solicitor and the client by which, if the case is lost the solicitor receives nothing for the work done after the date of the agreement.  If the case is won the solicitor can charge fees for the time spent on the case ("basic costs") and a percentage uplift ("success fee") to reflect the risk that he or she shared with the client and the delay in being paid.  Additionally the success fee is intended to reflect the fact that we cannot win every case.  The uplift therefore compensates us for those cases where we may lose and be paid nothing at all.  The success fee can be up to 100% of the basic costs depending on the level of risk. The client can seek insurance to cover the risk of having to pay the opponent's costs if he loses the case.  If he wins, provided that the opponent has been given the appropriate notice that the case is being funded under a CFA he can seek an order that the opponent pays his costs, the success fee and the premium for the insurance policy.

Following our article about proposed changes to the small claims limit under which the Justice Minister is consulting in the wake of the Jackson Report, it seems appropriate to mention that another proposal is that a successful litigant should no longer be able to recover his success fee opr insurance premium from his unsuccessful opponent. 

By way of example, under the current rules, a client could claim £25,000 and instruct us under a CFA providing for a 50% success fee.  We incur basic costs of £20,000.00 and succeed.  Our overall bill will therefore be £30,000.00 plus disbursements such as the Court fees, experts fees and the insurance premium.  While there is always a shortfall between costs incurred and costs awarded the client would see most of his costs covered by the opponent and it would be profitable for him to use this funding method.  Under the new proposals, the opponent would be responsible for the basic costs of £20,000.00 only leaving the client to pay the success fee and the insurance premium (which is often in the region of £10,000.00).  There may or may not be limits on how much the solicitor can charge by way of success fee by reference to a percentage of the money recovered.  This was the case when CFAs were first introduced.  If there are not, the £25,000.00 of winnings will be subject to an immediate deduction of £10,000.00 and the premium for the insurance as well as any shortfall between basic costs actually incurred and those allowed against the opponent.  If the success fee is limited to, say, 50% of the damages, there will be an immediate deduction of £5,000.00, the premium and the shortfall.  In either case the amount of the judgment which goes to the benefit of the successful claimant is very small.

This may be seen as a reasonable way of limiting the amount of cases which go to litigation but it again denies the parties the use of costs as a means of making an unreasonable opponent see sense.  Except in the case of large claims it is unlikely to be financially viable for the client to enter into a CFA and, if the success fee is limited, the solicitor will be reluctant to accept sharing the risk of losing because he will not be adequately compensated for that risk and the delay.   CFAs put a huge strain on cash flow because we cannot charge for our time as the case progresses.  However, if we win a case under a CFA the success fee gives us the benefit of a larger payment which offsets the problem.  Under the new proposals, it will not be in the interest of either solicitor or client to litigate under such an agreement.  A potential defendant, however unmeritorious, will have the tactical advantage of running the gamut and hoping, with some degree of confidence, that the claimant will not have the funds to fight the case or that if he does, the benefit will not make it worthwhile.  Those claimants will therefore not have the chance to pursue their case. 

We view this as another regrettable restriction on access to justice.  It and the proposed changes to the small claims limit have already led to at least one legal expenses insurer withdrawing from the market.   Sadly we too are forced to the conclusion that when the new rules are implemented, it will be both unethical and uncommercial to act under CFAs in the future.  There is no excuse for putting a client's time, money and resources to use on a claim in which he stands to gain only a small percentage of his winnings if he succeeds.  There is little benefit to us in accepting the risk of not being paid unless we have the chance of a success fee to offset the delay in payment and loss of time spent in those cases which are unsuccessful.  However strong the case is, there is always a risk of failure.  In a two horse race, somebody has to come second!  

We will of course honour the CFAs on which we are currently instructed and there is no reason to suppose that any change in the rules will be retrospective so as to have an adverse effect on them.  However, we will be withdrawing from CFAs as a method of funding new cases with immediate effect.  We will continue to advise on other means of funding litigation which might be available including insurance funding, stage payment funding and fixed monthly fee notes regardless of how much time has been spent in any particular month with an adjustment at the end of the case to cover overpayments or underpayments.  "No win, no fee" litigation will not be among the options which we offer.

The proposals for changes to the civil justice system

There are proposals to change the way in which the court system will operate.  These include raising the small claims limit to the level at which the multi track case management used to come into operation thereby reducing the ability to recover legal costs even on quite large claims, further attempts to make litigants mediate before resorting to litigation and a general focus on reducing the number of cases which go to Court.  Is this another attempt to get people to follow the principles developed by Lord Woolf or is it just a cost cutting exercise?  What will it mean to businesses which find themselves in a dispute?  This article explores just some of the proposals and comments on what they are likely to achieve.

Tahir Ashraf admitted as a solicitor

Congratulations are in order!  We are pleased to announce that Terry has completed his transfer from the Bar having been admitted as a solicitor on the 16th May 2011.  He will continue to work with Steven as a litigation consultant as well as continuiing with his appliation for higher rights of audience allowing him to appear in the High Court and the Court of Appeal.

Steven Kinch, the sole principal of SDK Law has commented: "This is a very welcome event. Not only does it increase the amount of work which Terry can do but it also means that SDK Law has a second solicitor and can offer even more value to our clients.  Additionally, there is even a chance that I might be able to take a holiday in the near future as I have a fully qualified and very safe pair of hands in which to leave the running of the practice for a week or so!"

Foreiture of leases - still worth it?

In this article we look at some of the problems for the professional Landlord in collecting ground rent and service charges. Forfeiture is an old and very effective weapon but its use is becoming increasingly limited  Is it about to be removed from the armoury.

Remuneration Certificates

In respect of all solicitors bills for non-contentious bills the remuneration certificate has been abolished with effect from October 2009.

The the remuneration certificate  procedure allowed clients who were dissatisfied with their bill to have it looked at by the Law Society.  There were conditions to the exercise of the right which had to be satisfied before the solicitor was obliged to apply for a remuneration certificate. These included payment of a proportion of the bill and payment of a fee to the SRA.

The need for business to use Lawyers

In an article on the 8th July 2010 the chairman of the Legal Services Board wrote about the need of small businesses to use lawyers. The article is based on research by the LSB and sets out cogently the importance of taking advice to address issues early rather than waiting for them to become bigger and more expensive to resolve.

Two years no bar to setting aside judgment

If a defendant suffers a default judgment through failure to serve a defence it is possible to have the judgment set aside so that the case can go to trial.  The Civil Procedure Rules put some conditions on the setting aside of judgment unless the judgment is irregular.

The Court has the ability to set judgment aside if:

• The defendant has a real prospect of successfully defending the claim; or

• It appears to the court that there is some other good reason why –

• The judgment should be set aside or varied; or

• The defendant should be allowed to defend the claim

In considering whether to set aside or vary a judgment entered under Part 12, the matters to which the court must have regard include whether the person seeking to set aside the judgment made an application to do so promptly.

Case law suggests that a delay of 56 days between the granting of a default judgment and the application to set judgment aside was at "the outer limit".

We are delighted to report that we recently obtained an order to set aside a 2 year old judgment.  The Judge hearing the case accepted that the defence was meritorious.  Although the delay in applying was great, the fact that our client was threatened with bankruptcy and all of the adverse consequences which follow from a bankruptcy order persuaded the District Judge that setting the judgment aside was proper.

The Defendant was ordered to pay the costs of the Claimant on the application and the costs of the dismissed bankruptcy petition.  It was not an inexpensive exercise and it would have been a lot less expensive to instruct us at the time when the Defendant received the claim.

Even so, this is the longest period between a default judgment being granted and being set aside of which  we know. If you have been involved in a longer one, please let us know.

Contract Law Basics

Although all businesses enter into contracts on a daily basis, unless their owners take the trouble to study contract law it is very easy for things to go wrong.  In this article we take a brief look at some very basic contract points which everybody should understand before attempting to do business.